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Where Will Your Future Leaders Come From?

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Sunday, October 2, 2011
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According to Right Management's research, many organizations are challenged to know where their future leaders will come from. Without such foresight, companies are at risk of misaligned leadership-development investments, weak bench strength and exposure from a lack of succession planning. The consequence? An unstable, short-tenured organization unable to compete in today's dynamic global marketplace.

Right Management surveyed more than 1,200 executives and found that only 6 percent of organizations have future leaders identified for all critical roles. A majority of organizations seem to have "some" critical roles covered, but that's barely reassuring. What is really striking is that as many as 22 percent said they do not have anyone slated to take over any key positions.

Here is our survey question and responses:

Do you have future leaders identified for critical roles in your organization?

Yes, for all critical roles: 6 percent

Yes, for most but not all critical roles: 17 percent

Yes, for some critical roles: 55 percent

No, not for any critical roles: 22 percent

Additional results suggest that, while the need for succession planning is becoming more evident, actual succession-management strategies and implementation plans are lagging behind.

Successful Leaders' Backgrounds

Right Management partnered with leading talent-analytics firm Chally Group to learn more about the backgrounds from which successful leaders come. More than 1,400 CEOs and human resource professionals from 707 organizations across the globe indicated that leaders evolve from a wide variety of backgrounds, experience and job functions. When asked what functional areas are most likely to produce a company's C-suite-level executives, operations was the most likely (68 percent), followed by finance (56 percent) and sales (49 percent). More specialized functions were less likely to provide the career path to the top, with marketing at 34 percent, human resources at 24 percent, engineering at 22 percent, IT at 13 percent and research and development at only 8 percent.

Implications for HR Professionals

Board members, executives and business leaders are now openly acknowledging that succession management is absolutely essential for sustained performance in today's organizations, as talent is now seen as one of the only competitive differentiators left. In fact, weak bench strength throughout the company can erode employee engagement and reduce overall performance.

This means organizations today must know what future leaders' success profiles look like (how they are similar and different from current leader success profiles) and where future leaders will come from who match that future success profile. Will they come from outside or inside the organization? How will these leaders be developed and, most importantly, how will development be focused to deliver accelerated, meaningful and measurable high-performance?

Human resource professionals can directly contribute by addressing four essential questions:

* What do future leaders "look like"? Create leader success profiles and facilitate visionary discussions with key stakeholders to confirm what will still be important in the future from the current profile and also reveal new elements in the profile that will be necessary to develop in future leaders.

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* What talent do we currently have or still need? Competency-based assessments, aligned with the target competencies identified in the leader success profiles, should provide an accurate gap analysis and information.

* How will we find leaders of the future? Whether hired externally or accelerated internally, development is the first step in ensuring a steady flow of leaders to continue to grow the company over time. Development needs to be grounded in real work and ensure the application and integration of activities, supported by stretch assignments, coaching and action learning efforts. Real-life work situations need to be carefully selected in order to develop the right parts of the success profile for key leadership roles.

* How will we build/sustain the leadership pipeline? Plan and manage succession to not merely be on who is next in line, but also ensure a smooth, seamless transition from one leader to the next. Reacting quickly to change, restructuring for growth and sustaining competitive advantage into the future are the outcomes of effective succession management, where both critical positions in the organization and key talent needs are addressed simultaneously.

Concluding Thoughts

Increasingly, the ability to find the right talent in the right place will become more difficult as demographics shift and the talent mismatch widens. It's imperative that organizations know what their future leaders need to be able to do and where their future leaders will come from. Best-practice recommendations for human resource professionals are to update and align the leader profile to address the business challenges ahead, assess the talent available today and forecast what is needed in the future, develop leaders, and plan and manage succession.

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